AT&T's VOIP Rollout Heats Up Price War

While the telecom giant's push into the market raises VOIP's street cred, its aggressive service pricing may drive startups over the edge, analysts say.

AT&T announced June 30 that it is rolling out its consumer VOIP service in 10 more markets. The company also lowered the introductory price of the service to $19.99 a month, pitching it squarely against startup providers such as Vonage and BroadVoice.

The AT&T brand gives a great boost to VOIP's credibility among consumers, said Jon Arnold, a VOIP market analyst at Frost & Sullivan. "The more people who have a choice of [using] AT&T [VOIP], the faster this market can grow," he said.

"When you're the consumer and you're getting all these fliers and TV ads and pop-ups from all these VOIP offers, it creates confusion that makes average customers more likely to default to the name they know."

If brand awareness matters more than technology or being first to market, as Arnold and many others believe, AT&T's VOIP service may have the best survival prospects for the long term. "The scary part is, they're discounting so quickly," Arnold said.

Ellen Muraskin is editor of eWEEK.com's VOIP & Telephony Center. She has worked on the editorial staff at Computer Telephony, since renamed Communications Convergence, including three years as executive editor. Muraskin's work has also appeared in Popular Science magazine and other publications.
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